India's GST Raised Rs 2.04 Lakh Crore in September 2026 and Is Shared Between the Centre and the States Under a Council Where the States Hold Two-Thirds of the Vote

India’s gross GST collections for September 2026 were Rs 2,03,521 crore, up 14.7 per cent from Rs 1,77,365 crore a year earlier, according to the provisional monthly report on the GST portal. For April to September 2026 the total is Rs 12,46,278 crore, up 11.6 per cent. According to the Press Information Bureau, GST taxpayers numbered 1.65 crore in May 2026, up from 66.5 lakh in 2017, and gross collections of about Rs 7.4 lakh crore in 2017-18 (GST began in July 2017, so that year covers nine months) had grown to about Rs 22.27 lakh crore by 2025-26.

Two things make the tax unusual. It is levied by the Union and the states together, and the body that sets its rates is written into the Constitution, with the states holding two-thirds of the vote.

What the 101st Amendment changed

Before 2017 the Centre taxed manufacture (excise duty) and services, while each state taxed the sale of goods (VAT, entry tax, octroi and more). GST subsumed 17 taxes and 13 cesses into one framework, the bureau says, ending what it describes as “tax on tax”, meaning tax charged on top of tax already paid.

That needed a constitutional amendment, because the Seventh Schedule gave the two governments separate fields. The bill passed the Rajya Sabha on 3 August 2016 and the Lok Sabha on 8 August 2016, and the Council’s own history says more than 15 states ratified it before the President signed on 8 September 2016. It became the 101st Amendment Act. How the amendment procedure works is covered separately. Article 279A is one of the few provisions that a state-ratification vote protects.

Four changes carry the system. Article 246A lets Parliament and every state legislature make laws on GST, with Parliament alone for supplies between states. Under Article 269A the Government of India levies and collects GST on inter-state supplies, imports count as inter-state, and the proceeds are apportioned between the Union and the states as Parliament decides on the Council’s recommendation. Whatever is apportioned to a state stays outside the Consolidated Fund of India. The Council itself comes from Article 279A. Under Article 366(12A), GST means any tax on the supply of goods or services, with alcohol for human consumption excluded.

Five fuels, namely crude oil, high speed diesel, petrol, natural gas and aviation turbine fuel, come into GST only from a date the Council recommends under Article 279A(5). The amendment also removed or rewrote several Seventh Schedule entries; the three lists and what moved are set out in another piece. The tax took effect on 1 July 2017, and the Press Information Bureau announced a midnight function in the Central Hall of Parliament on 30 June to mark it.

One tax with three names

GST charges tax on the “supply” of goods or services, not on making or selling them separately. A sale within one state carries two halves: central GST (CGST) for the Union and state GST (SGST) for that state. A sale from one state to another, or an import, carries a single integrated GST (IGST), which the Centre collects. IGST rates are generally twice the CGST or SGST rate, the bureau says. An 18 per cent rate is therefore 9 plus 9 within a state, or 18 as IGST between states.

GST is a destination-based tax, so the money belongs to the state where the goods or services are finally consumed. Each month the Centre settles the state share of IGST to the state of consumption. In September 2026 the report shows CGST of Rs 37,762 crore, SGST of Rs 45,363 crore, domestic IGST of Rs 54,871 crore and IGST on imports of Rs 65,525 crore, which adds up to the Rs 2,03,521 crore headline. After refunds of Rs 27,001 crore the net figure was Rs 1,76,520 crore. The same report puts the states’ and Union territories’ receipts at Rs 92,075 crore after the IGST settlement, against Rs 45,363 crore of SGST collected directly.

Administration is shared too. The Goods and Services Tax Network, the company that runs the portal, is owned 50 per cent by the Centre and 50 per cent by the states. The September report counts 73,58,966 registration numbers (GSTINs) handled by central tax offices and 97,18,012 handled by state ones on 30 September 2026.

How the GST Council decides

Article 279A(2) seats the Union Finance Minister as chairperson, the Union Minister of State in charge of revenue or finance, and the finance or taxation minister of each state. Article 366(26B) counts Union territories with a legislature as states for this purpose. The Council recommends rates, exemptions, the turnover threshold below which a business pays no GST, model laws and the rules for splitting inter-state tax.

A decision needs three-fourths of the weighted votes of members present and voting. The Centre’s vote weighs one-third of the total cast and all states together weigh two-thirds. By that arithmetic the Centre can block any proposal, and the states cannot pass one without the Centre.

The Council says it generally works by consensus, and the Press Information Bureau reported in 2017 that “All the decisions of Council were taken with consensus” up to the launch. It first met on 22 and 23 September 2016, and its 57th meeting was held on 8 October 2026.

Whether the recommendations bind anyone went to the Supreme Court, which ruled on 19 May 2022 in Union of India v. Mohit Minerals that they are not binding on the Union or the states, because Article 246A gives Parliament and the state legislatures simultaneous power to legislate on GST. The Court called the recommendations the product of “collaborative dialogue” and described them as recommendatory, adding that the Government is bound by them when it makes rules under the CGST and IGST Acts.

The rate slabs since 22 September 2025

GST began in 2017 with four main rates of 5, 12, 18 and 28 per cent, plus a cess on luxury cars, aerated drinks, pan masala and tobacco. On 3 September 2025 the 56th Council meeting recommended replacing them with a standard rate of 18 per cent, a merit rate of 5 per cent and a special rate of 40 per cent on a select few goods and services.

The Central Board of Indirect Taxes and Customs notified the new goods rates on 17 September 2025, and the Council’s decision set 22 September 2025 as the start date for services and for all goods except pan masala and tobacco products. Notification 9/2025 lists central tax rates of 2.5, 9 and 20 per cent, which double to 5, 18 and 40 per cent in total. It also keeps special rates for diamonds and precious stones, such as 0.125 per cent central tax (0.25 per cent in all) on rough diamonds.

The Council’s release lists what moved. UHT milk, packaged paneer and Indian breads went to nil. Air conditioners, televisions, dishwashing machines, cement, small cars and motorcycles up to 350 cc went from 28 to 18 per cent. Individual life and health insurance policies were exempted. Under the bureau’s June 2026 backgrounder, the 40 per cent rate covers lottery and online gaming, tobacco, aerated drinks, high-end cars, yachts and private aircraft.

The five-year compensation promise and how it ended

Section 18 of the amendment required Parliament to compensate states for revenue lost to GST for five years. The GST (Compensation to States) Act, 2017 set the figure at 14 per cent annual growth over each state’s 2015-16 revenue from the taxes GST replaced. A cess on pan masala, tobacco, coal and cars funded it.

Payouts, per the bureau’s April 2022 note, were about Rs 49,000 crore for 2017-18, Rs 83,000 crore for 2018-19 and Rs 1.65 lakh crore for 2019-20. When the pandemic cut revenue in 2020-21 the Centre borrowed Rs 1.1 lakh crore that year and Rs 1.59 lakh crore in 2021-22 and passed the money to the states on a back-to-back basis. The five-year period ended on 30 June 2022, as the Sixteenth Finance Commission records.

The cess carried on to repay those loans. The 56th meeting kept tobacco and pan masala at their old rates until the loan and interest obligations on the compensation account were discharged, and notification 03/2025 set the compensation cess to nil on every scheduled item from 1 February 2026.

What the states and the Union said about it

The Sixteenth Finance Commission, whose report covers 2026 to 2031, recorded the complaints and its answers in Chapter 7. Karnataka, Kerala, Tamil Nadu, Telangana and West Bengal told it they had lost fiscal autonomy, since before GST they could change sales tax or VAT rates and now any rate change needs Council approval. Himachal Pradesh, Chhattisgarh, Gujarat, Haryana, Uttarakhand and Punjab argued that destination-based taxation moved revenue to consuming states. Many states said the end of compensation on 30 June 2022 left a sudden gap, with Tamil Nadu estimating a shortfall of nearly Rs 20,000 crore in 2024-25. Punjab and Uttarakhand called the guaranteed 14 per cent unrealistic.

The Commission replied that if GST cut state revenue it probably cut the Union’s too, and that the remedy was for both to reform GST together in the Council. It also reported that the states’ combined own-tax revenue was 6.2 and 6.1 per cent of GDP (six-year and three-year averages ending 2016-17), against 6.3 per cent in 2022-23 and 6.4 per cent in 2023-24. It called the loss of rate flexibility beyond its remit, and expressed the view that GST “will emerge as a similarly outstanding example” of the compromises federalism requires.

The Union’s side appears in the Press Information Bureau’s 2022 note, which says that taking the borrowed amounts into account Rs 2.78 lakh crore had been released for 2020-21 and nothing was pending for that year. On the wider money question, the Union told the Commission that excluding cesses and surcharges from the shared pool is “by Constitutional design”. The cess dispute is covered in the piece on how the Finance Commission divides central taxes.

What the Council took up on 8 October 2026

The 56th meeting dealt with rates. The 57th, on 8 October 2026, dealt with process: the Council recommended omitting section 69 of the CGST Act, which gives officers the power to arrest, raising the monetary threshold for prosecution from Rs 1 crore to Rs 5 crore, and cutting the general penalty under section 125 from Rs 25,000 to Rs 10,000. It also recommended waiving the late fee on delayed returns for taxpayers with turnover up to Rs 5 crore if they file by the end of the month the return was due.

That release adds that the recommendations take legal force only through circulars, notifications and amendments to the law.